Here is a step by step explanation of how I put together a very clear chord/lyric sheet:
1) Use "Courier" font or any font that uses the exact same size block for each character. This way it will be easier to exactly align chords with syllables. Also, if you need to adjust the size of the text, it won't ruin your alignment.
2) At the top of the sheet, notate the style, time signature, and tempo. This can save a lot of trouble in a rehearsal or performance situation where someone is sight-reading the chart. For example, "Swing, 4/4, quarter note = 132."
3) Transcribe the lyrics precisely as heard in the recording. Typically, it is best to copy and paste repeated sections, rather than simply saying to "jump back to the refrain" or "jump to the pre-chorus." When performing from a lead sheet, it can get really confusing to try to follow a form that is not presented linearly. Put a space between stanzas and refrains, etc, to make it visually easier to see where sections begin and end.
4) Type in the chord symbols directly above the exact syllable where they occur in the text. This will ensure that all of the musicians change chords at the same time. If the first chord of the line occurs just before the first syllable of text, space the text over in order to indicate this. It is also very helpful to put vertical bars "|" to indicate where each measure occurs, as some chords may last two bars or more, whereas chords may also change twice or more in the same measure. Repeated sections may be indicated with repeat bars, using vertical bars and colons.
||: Cm F7 | Bb | Gm C7 | FMaj7 :||
5) Tempo changes or significant dynamic changes should also be shown in the chart. The more specific you can be, the more likely all the musicians will perform it the same way. These are often indicated in italics.
p mp mf f ff crescendo decrescendo rit. molto rit.
6) Adjust margins and text size (remember to use Courier font) as necessary and use page breaks to make sure that a line of chords has not been separated from its corresponding line of lyrics. In fact, I personally like to make sure that page breaks only occur between sections, such as between a verse and chorus.
Final note - the more specific you can be with the chord/text alignment, chord length, dynamics, tempo, and tempo changes, the more likely a group of musicians will be able to execute the chord changes in sync with each other. Of course, it is best to use your ears and actually listen to the music many times to internalize the changes. However, even if you have a good internal understanding of a piece, it can be very confusing to play from a poorly transcribed lead sheet that belies what you are hearing in your head. Anything you can do to make a chord chart make better visual sense is worth saving trouble in a rehearsal or performance.